Aarp vacationplanner9/4/2023 It’s easier to see what you could have cut and what was a total waste after you’ve spent the money. “People will find a credit card promo that will pay for a flight or a couple nights at a hotel, and they will spend way more than normal to get that bonus in a short time period.” But they often lead to an increase in spending that the person just can’t afford to cover. When used responsibly, credit card points can be really helpful, said Reeves. Reward credit cards come with many travel benefits, including points that can be used to purchase hotel stays and flights.Īccumulating travel points is a great way to offset the cost of a trip if the credit card charges are purchases you would already be making and they are amounts you will be able to pay off at the end of the month. If you don’t have the money to pay for the vacation, then you should delay the travel or adjust your plans, he added. If you use a credit card as you are traveling, be aware of extra charges on some cards like, foreign transaction fees (typically 3%) that can be incurred on purchases you make outside the US. “It’s best to budget throughout the year and save a monthly amount to be used on travel.”įor example, setting aside $300 a month in a travel savings account will pay for a nice $3,600 vacation each year without having to use debt or pull from cash reserves, he said. “This can add hundreds of dollars to the final cost of the vacation due to the interest charges,” said Simonson. That might seem like common sense, but Simonson said many families will put travel expenses they can’t cover on their credit card and then they are still trying to pay it off a year later. Never spend more than you have in the bank on a vacation, said Simonson. Spend your money on what makes you happy.” “As long as you’re not putting those in danger. “Don’t put any of your other non-negotiable priorities at risk,” he said, including fixed expenses, paying off current debt, funding retirement and making sure an emergency fund is in place. Just make sure your interest in travel doesn’t compromise your financial priorities, said Tyler Reeves, a certified financial planner at Plimsoll Financial Planning. “But if you carve out a little bit from each one, and put it toward travel, you can have a nice amount set aside for a vacation.” If travel is a high priority, you may find it competing with your other day-to-day spending on restaurants, concerts, shopping, golf memberships or alcohol. “Travel falls within that 30% sleeve and a percentage of that 30% can be allocated to your vacations,” said Simonson. In this plan, 50% of your income goes toward fixed costs like your mortgage, utilities, food and childcare 30% is for discretionary spending and 20% is saved. One way to help determine the amount you can spend on a vacation is to follow the 50/30/20 budget rule, said Eric Simonson, a certified financial planner with Abundo Wealth, which provides financial advice and planning to travel lovers. Baby Boomers plan to spend an average of $6,600 on travel this year, while Gen Xers plan to spend $5,400 and Millennials $4,400, according to AARP. Older Americans plan on spending more, overall, on travel in 2019 than younger people. Plus, there are the unforeseen expenses like delayed flights, packages that are not as all-inclusive as you thought and tips and gratuities that mount up along the way. Prices for flights are constantly in flux. How to make the days that you’re in the office really count Want a better paying job? First you need to figure out how much you really make.
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